My conversations about innovation and the enterprise have afforded me an intimate understanding of the technological challenges companies are facing. Chief among these concerns, regardless of industry or sector, is digital transformation.
Just the other day, a C-level financial executive came to me seeking guidance on this topic. He said his company was on a mission to become a lean, mean, digital machine, and was currently leading four or five initiatives to modernize operations and convert systems from legacy to new. “We’re moving everything to the cloud, we’re building new apps, and our teams are working toward agile methodologies,” he said, “I’m proud of my teams for all the hard work they’ve put in—in fact, they’re worn out from all their efforts! But honestly, I feel like all this work hasn’t paid off. We’re not seeing the dramatic progress that was promised. What are we doing wrong?”
He’s not alone in his frustration. I’ve seen many organizations get excited about these kinds of changes, high on the notion that once they’ve knocked out a few initiatives, they will have conquered digital transformation and secured the future of their business through technological fortification. But I reminded him not to get too distracted by all of the technology jibber-jabber, and instead make sure to keep the big picture in mind: Digital transformation is, first and foremost, a fundamental shift in your business model.
It isn’t simply about switching from outdated technologies to newer, slicker solutions. It’s not about transitioning to the cloud or performing a complete upheaval of legacy systems or processes. And it definitely can’t be accomplished in a few steps or one fell swoop. In reality, digital transformation is a journey that requires a road map and strategic planning to ensure all of your initiatives support the greater movement toward agile, streamlined and more efficient, and directly address and impact your business needs and objectives.
To this end, I posed a critical scenario to this financial executive: Consider an industry competitor who is smaller, newer, more agile and less bound by the market. If this player were to become super successful, how would your company respond? And which parts of your business specifically would be responsive? His reply was that his company is adopting ideas from new-entry players, primarily online-only banks. He’s building a new mobile platform and revamping his web properties to make banking more efficient for his customers.
While these efforts certainly have value and no doubt will improve how he does business, it’s not enough to constitute a digital transformation. These changes won’t be enough to drive the fundamental shift that needs to happen. It’s more of a blended approach, which won’t be enough. Hybrid models can allow companies to survive—but not thrive.
We can draw similarities to the evolution of automotive technology. While internal combustion engine (ICE) cars have long dominated the market, about a decade ago electric vehicles gained real popularity as a superior alternative. However, there have been real obstacles in the way of pure electric vehicles going mainstream. For one thing, we have so much invested in the infrastructure to support ICE cars and very little in the way of making electric cars practical. While charging stations are expanding and becoming more common, we don’t have nearly enough to make pure electric travel the practical choice—for now.
What has been our interim solution? Hybrid vehicles. In response to the electric contender, we’ve developed a number of vehicles that bridge the divide between infrastructure and efficiency needs. We created ICE-electric hybrids to harness the beauty of electric without having to sacrifice on practicality as the infrastructure works to catch up.
So this is what our financial executive is actually doing: he’s going the hybrid route by borrowing some of the nice, fancy features from the new entry companies while keeping an entire foot of his company in the traditional ICE world. And though the hybrid movement has been serving us reasonably well with cars, it’s not a good approach when it comes to a technology strategy. In the world of enterprise tech, bi-modal IT is like a hybrid vehicle. Sure, it allows companies to say, “We’re getting more electric!” But if they make the mistake of designating a hybrid operating model as their end goal, they’ll be stuck with split IT personalities and bifurcated cultures.
Organizations can get by on a hybrid approach, but only for so long. They may be able to modernize in part and reap some of the benefits of better technology, but it just gets too expensive to be sustainable. Hybrid necessitates investing in both types of infrastructure—legacy and new, gas stations and charging stations—to keep services running. In the long run, this holds companies back from truly taking advantage of all the benefits of electric, and they need to build transition technologies between ICE and electric components to make them run as smoothly and efficiently as possible.
“Okay, so hybrid’s not the way to go. What do I do instead?” the financial executive asked. My answer is to create a space expressly for innovation. You should compile whatever resources you can to create an entirely independent division of your company (or even a separate company) that makes room for innovation. This arm would be free from the constraints of legacy systems, free to ignore the norms of its parent, and free to create its own rules and business model. Using our example from the automotive industry, you can think of it as akin to General Motors creating an entire, standalone electric division, rather than simply converting Chevy models into electric versions.
While your organization may be in survival mode in the near term, you can’t lose sight of the pure electric play. Think about the inevitability of the electric car age: Battery prices will continue to plummet, driving ranges will increase, charging stations will multiply and the auto industry itself is investing in both EV and air pollution standards. We’re not putting all of our money on oil anymore.
So as you move forward on your digital transformation journey, be mindful of your true end goal: to have your business thrive through this technology cycle and the next (and hopefully the one after that, too). Going hybrid is a necessarily survival mechanism, but only as long as it builds momentum and helps drive you toward success.
About the Author / Abbas Haider Ali
Abbas Haider Ali brings over 16 years of experience in networking, cloud services, software, and cloud communications. As CTO of xMatters, he is responsible for evangelizing the adoption of communications-enabled business processes, and has worked closely with more than 400 global enterprises and IT organizations to create a vision for adopting intelligent communication strategies across business scenarios. Abbas holds a BASc in Computer Engineering from the University of Toronto.